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Investment Exclusions

As a prudent fiduciary committed to serving its participants and institutional investors, Wespath Benefits and Investments (Wespath) recognizes and conducts both “values-based” and “value-adding” investment activities.

Values-based investing seeks to align shareholders with their convictions. We look to the The United Methodist Church’s (UMC) Social Principles, The Book of Discipline and The Book of Resolutions for guidance here; these texts are the foundation of our ethical exclusions policy.

Value-adding activities, on the other hand, seek to improve investment results. This is applied across our entire sustainable investment framework and is the basis for much of our investment philosophy. As it relates to investment exclusions, Wespath’s Board of Directors adopted guidelines on the Management of Excessive Sustainability Risk (MESR). Under our MESR guidelines, we recognize and exclude investments that expose our funds to high levels of sustainability-related financial risk.

Ethical Exclusions

We avoid investments in any company or entity whose core business activity* involves the production and/or assembly, direct sale, distribution, and/or marketing of the following products and/or services:

Excluded investment Options

* Generally, a "core business" is one that accounts for 10% or more of a company’s revenue derived from the objectionable products and/or services and discontinuing the activity would materially change the nature of the company’s operations. Different thresholds apply for restaurants and other food retailers, as well as suppliers of key components to the products and/or services included in our policy. For our full ethical exclusions policy, please review Wespath's Investment Policy.

Sustainability-Related Financial Risk Exclusions

In instances where a particular issue or set of companies or industries expose investors to high levels of sustainability-related financial risk, our board may adopt guidelines to exclude certain investments. To date, our board has adopted two such investment guidelines:

coal truck
Climate change, with a specific focus on thermal coal

Human Rights Dove
Human rights, with a specific focus on high-risk operating areas


Q & A: MESR Guidelines

  1. What led Wespath to adopt the thermal coal and human rights guidelines?
    Wespath actively pursues strategies designed to address the risks from investing in companies with inadequate management of environmental, social and governance (ESG) issues. We share the concerns of many of our stakeholders regarding the importance of addressing climate change and protecting human rights. Moreover, these guidelines provide direction for identifying and managing the excessive sustainability risk that could potentially affect the value of assets held on behalf of our investors.
  2. What was Wespath’s process in developing these guidelines?
    Wespath recognized that as a long-term investor, excluding companies we believe pose sustainability-related financial risks is a function of prudent fiduciary investment management. In preparing the MESR guidelines, Wespath studied the United Methodist Social Principles to understand the Church’s positions regarding climate change and human rights. We listened to important voices knowledgeable about these two topics within and outside the Church. Wespath jointly convened (with the General Board of Global Ministries) the UMC’s Human Rights and Investment Ethics Task Force, and it continued to build on that collaboration with three UMC general agencies. In addition, we collaborated with other leading sustainable investment asset owners in the U.S. and abroad.
  3. Which groups in the Church provided input to these guidelines? Which groups outside the Church provided input?
    In developing these guidelines, Wespath relied on, and continues to collaborate with, the leadership of the General Board of Global Ministries, the General Board of Church and Society, United Methodist Women, representatives of several annual conference task forces, and other groups and individuals within the Church with insight on these topics. Outside the Church, Wespath consulted with, and continues to rely on, the ESG expertise of its investment managers. Wespath also talked with a number of collaborative investor networks including the faith-based organization Interfaith Center for Corporate Responsibility (ICCR); Ceres (a leading non-profit advocate for more sustainable environmental practices); the staff and signatories to the UN Principles for Responsible Investment (PRI); and many secular sustainable investment leaders. Wespath carefully researched and analyzed information from notable non-government organizations devoted to promoting human rights, including Human Rights Watch, the Business and Human Rights Resource Centre; Amnesty International; the Robert F. Kennedy Center for Justice and Human Rights; and the Carter Center. Organizations focused on climate change included the World Resources Institute and the Carbon Tracker Initiative.
  4. Why are these guidelines important for prudent investment management of investment funds? Is it possible they could hurt performance since their application results in limiting the number of investable securities?
    Wespath believes that developing and adopting these and other guidelines that address ESG issues is a function of prudent fiduciary investment management. We strongly believe that these guidelines will lead to improved investment performance by addressing the investment risk created by investing in companies with unsustainable business policies and practices.